The SMH blog has some new capex cliff estimates from Access Economics today:
The key economic release for Australia this week is the private sector’s capital expenditure estimates, which could affect whether the next interest rate movement is up, down, or remains the same.
That’s because the data will be the first gauge of how much companies – in both the mining and non-mining sectors of the economy – are planning to invest in the 2014-15 financial year.
The question on everyone’s lips will be – will there be a lift in non-resources investment as mining spending falls off?
Bloomberg’s consensus forecasts from analysts is for the first estimate of 2014-15 capital expenditure expectations to be about $139 billion. The fifth estimate for 2013-14’s investment intentions is $166 billion. Business investment for the three months to December is expected to slip by 1.3 per cent.
“This first estimate for 2014/15 will help in determining exactly what resource investment correction lies ahead,” TD Securities head of Asia-Pacific research Annette Beacher says.
“Thanks to the Access Investment Monitor we already know that the biggest adjustment is likely to take place next year, it will be down to exactly when.
“At this stage, mimicking the Access profile, we assume a sharp -25 per cent correction in engineering investment over 2015 (after -3 per cent decline in 2014) for overall business investment fall of –9 per cent.”
A few points:
while the capex cliff is presumed to be biggest in 2015, nobody knows for sure, Access no better than anyone else;
others see the second half of this year as more precipitous and with good reason given peak spend at Curtis Island is already past, and
while the ABS capex report is important, it’s already been marginalised as unreliable by the RBA. Bare that in mind Thursday
Still, it’ll be a fun release to report and will be market sensitive.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
